Over the past week Apple has been the darling of the stock market, with its share price rocketing to $636 at close last night, and two analysts claiming that that Apple could see $1,001 a share in 12 months time. Now an analyst has downgraded Apple based on claims that the mobile networks are no longer prepared to pay high subsidies for the iPhone.
BITG Research analyst Walter Piecyk claims that operators have been highly subsidising handsets in order to offer generous upgrade policies. Piecyk suggests that this costly exercise that will not continue. (More below)
Piecyk writes: "Operators, unwilling to stall the pace of ARPU (average revenue per user) growth, offered generous upgrade policies including some that enabled a fully subsidized phone upgrade only one year in to a two year contract. We expect those policies to change as the faster upgrade rate of smartphones compared to legacy feature phones has been a costly surprise to post-paid and pre-paid operators, alike," according to an Apple Insider report.
Piecyk notes that AT&T, the network that allowed users to upgrade to the iPhone 4S when only one year into a two year contract, now plans to adopt stricter upgrade policies to stop hemorrhaging cash.
He suggests that wireless operators “plan to stunt the pace of phone upgrades in 2012”. As a result: "In the United States, we expect iPhone sales to decline 4 million sequentially to 9 million with the largest impact coming from AT&T, Apple’s largest customer.”
Based on this prediction, Piecyk suggests that Apple’s will see a worldwide drop in sales of 27.5 million units in its third quarter (which will close around 25 June). He suggests that Apple will see “in a revenue estimate that is $1 billion below consensus.”